There was rending of garments and wearing of sackcloth last week when the jobs report came in at only 80,000 new jobs created in June, the third disappointing report in a row. Pundits looked to find cheer despite the disappointing outcome. For instance, the number of hours worked rose, and 25,000 temps were added, which the optimists used to contend that employers saw more demand, but weren’t quite confident enough to make permanent hires. Citigroup’s Tobias Levkovich argued that more firms are planning to add jobs. The gloomsters pointed out that global manufacturing output is weakening, and new orders in particular are signaling contraction. And John Hussman noted (hat tip Scott):

As for the June employment figures, the internals provided by the household survey were more dismal than the headline number. The net source of job growth was the 16-19 year-old cohort (even after seasonal adjustment that corrects for normal summer hiring). Employment among workers over 20 years of age actually fell, with a 136,000 plunge in the 25-54 year-old cohort offset by gains in the number of workers over the age of 55. Among those counted as employed, 277,000 workers shifted to the classification “Part-time for economic reasons: slack work or business conditions.”

But as much as analysts desperately pour over the entrails of new data to make prognostications, it seems that many forecasters keep making comparisons to past recoveries, when typical recessions are inventory-driven (more than 100% of the change in GDP is change in inventories). As we are often reminded, the aftermath of a financial crisis, particularly a global financial crisis with a concerted effort to protect banks, is a very different beast. Some analysts do incorporate that perspective, but they still seem to be in the minority. “This time it’s different” is much more popular on the upside than downside.

There are many studies that show that economic forecasts have a poorer success rate than tossing a coin. They tend to work when they are obvious and are rarely accurate when something surprising occurs. Friedrich Hayek once said that “the curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” He probably didn’t apply that point to economic models, including his own, but it is especially true of their inadequacies.

There are a number of obvious reasons why this is so. One is that economic forecasts tend to be a projection from the past, and so seminal changes tend not to be detected. Second is the illusion that economics can be a science. The method of science is to aggregate data or apply mathematics in order to identify what is unchanging, invariant. That means projecting from the past. It quickly results in statements of the obvious or circular arguments when applied to economics, and they do not lead to good predictions…

Why is this important? Because no-one ever made a buck saying they didn’t know something…The management thinker Peter Drucker, a sharp critic of economic theory, once said, nostalgically, that economics used to be a humble discipline in which practitioners admitted they don’t know much. That is certainly no longer the case and the reason is simple. There is no money in admitting lack of knowledge. Ergo, don’t admit it.

There are nevertheless are things that the experts and the public know well. One is that it is now fashionable for businesses not to value their employees, despite “employees are our most important asset” type PR to the contrary. While many of the successful entrepreneurs I know like building enterprises and are extremely loath to cut staff, Big Corporate America has been shedding jobs even in expansions.

And increasingly, when I see the Wall Street Journal interview the owner/operators of small or medium-sized businesses, a surprising number display contempt towards workers (you’ll see it particularly when they complain that they can’t find enough good workers, which in the overwhelming majority of cases means they aren’t willing to pay up for the sort of people they’d like to hire). There is similarly more than a bit of inside the Beltway detachment from what is happening in the heartlands, in part due to the fact that the DC area is holding up well thanks to the rising tide of lobbyist dollars. For instance, I recall Gene Sperling making the case that the Administration had created a lot of good middle class jobs, and I realized there was something discordant about his remarks. I realized later that Sperling’s “middle class” was an abstraction, people like construction workers, not the sort he really knew personally. And the Administration’s has not only failed to offset the shrinkage of state and local positions, it’s managed to destroy jobs all on its own. This chart is from Warren Mosler (hat tip Cullen Roche):

It’s beyond the scope of this post to parse why job generation has eroded as a business and policy priority, but we can single out some culprits, and I’m sure readers can add more. One is the shift from the old economic model of sharing productivity gains between labor and businesses. Stagnant average worker incomes meant that rising, unproductive consumer leverage helped provide for the appearance of rising standards of living. We have reached the limits of that paradigm, with new college graduates often in the position of indentured servants, carrying such heavy debt loads that they are deferring setting up households, a further brake on consumer spending. Older folks who have seen their wealth decimated by falling home prices and poor investment performance are also giving greater priority to saving/paying down debt than spending.

A second cause is the strong shift to an anti-inflationary policy bias. Paul Volcker allegedly monitored construction wages to see if he had succeeded in beating inflation. Having labor slack was one way to reduce labor bargaining power and keep price pressures at bay. So high and moderately high levels of unemployment don’t raise the same degree of alarm that they once did. Reagan was freaked out when unemployment rose over 8% and took much more aggressive measures to combat it than Obama has.

Third is the rise of offshoring and outsourcing. Workers, even in white collar skilled jobs, are increasingly seen as fungible, to be replaced if they become too costly or difficult to manage.

Readers are welcome to disagree, but our high unemployment isn’t just due to the aftermath of a global financial crisis. Japan went for a model of shared sacrifice. Top executives and middle managers, who weren’t all that well paid to begin with, took wage cuts in order to preserve jobs. By contrast, we’d seen CEO (and presumably C level pay with it) rise even as the economy has flagged. If jobs were seen as the glue of society, as they are in Japan, there would be more pressure on executives and government officials to be doing more to provide work for ordinary citizens. The current unemployment rate at least in part reflects a tacit acceptance of a new order, one that is not to our collective advantage, and that deserves to be challenged.

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88 comments

In a largely excellent post I take exception to the suggestion that one “culprit” is “the shift from the old economic model of sharing productivity gains between labor and businesses.” There never was such an economic model, and the closest we came was in the Forties and Fifties, when big business passed along the extortionate demands of a few big industrial unions in price increases which devastated the largely unorganized remainder of the working class.

I would suggest that a major contributor to the continual job losses is the collapse of residential real estate, which probably contributed at least 10% and perhaps more to the employment numbers of the past thirty years. All this “employment” (largely in construction, and finance, but also in subsidiary activities related to relocation and household formation) was inflated by the securitization bubble, and none of it should be expected to return anytime soon as nothing is happening to return real estate to affordable price levels.

Finally, the plain fact is that corporate business has no interest in “creating jobs”, only in sustaining its public relations myth about its own job creation powers. What corporations feed on is ever increasing “productivity”, which means increasing the revenue from every dollar spent on labor, and you don’t get this by adding workers but rather by forcing them to speed up and shipping the jobs to the Phillipines and Vietnam whenever possible.

We are likely to experience steadily shrinking employment (and ever intensifying competition among job holders) until government is reorganized as an employer of last resort, and this will require a release of government from the borrowing constraints imposed by Wall Street, in short a federal government which simply prints money to pay those it employs, just as Lincoln simply printed money to finance the Civil War. Nothing stands in the way except the utter corruption of both political parties and the ideological nonsense of neoliberal economists and other toadying hacks.

Amen brother, though I’d like to add an extra factor: even if miraculously the manufacturing ever all returned, there’s zero guanrantee it’d bring /any/ meaningful increases in “jobs”. There is a good chance that the “luddite fallacy” is in fact reality, automation of mental tasks via ever increasing AI capabilities will enable ever smaller amounts of people to run the entire productive economy.

As long as we pretend it’s not going on and let ourselves get distracted by the offshoring line of thought we’re going to end up in misery. And just in case there’s some delusions about how service sector is going to keep on absorbing the unemployed, just ask yourself, how often do you physically visit a bank nowdays?

Of course the second great depression is going to mask this effect for at least the next decade as the debt deflation unwinds, so there’s a good chance that the fools and the blind (institutionally or otherwise) are going to keep on screaming their inanities about communism if anybody so much as dares to undertake any meaningful antidotes…

Offshoring and outsourcing caused the PERCEPTION that productivity gains were shared in the past.

The screws were just as tight in the past, as many have already pointed out, but the technology — the increased production of newer and more powerful Deceptive Externalized Tools of Dominance (DETODs) — facilitated taking advantage of less skilled labor pools all over the globe, making the past in comparison appear to be of a more sharing nature. Vanilla Greed for Profit, the old fashioned Evilism, still got the Lion’s share of the productivity in that past period of time. But the disease of Evilism mutated into Pernicious Greed for Destruction and Control — into Xtrevilism — and it is Xtrevilism that is now responsible for; the offshoring, outsourcing, the financial ‘crisis’, rolling global debt bubbles around the globe, capture of governments around the world, elevated debt slavery, invasive wars, endless wars on abstractions, and on and on and on…

But the big culprit here — the common denominator in all of this in the past fifty plus — is the global usurpation and erosion of the ‘rule of law’ by the aberrant sociopathic Xtrevilist few. This is an intentional and incremental destruction of morality by the morally diseased few so as to create chaos to facilitate control and a herd thinning in the greater populations.

This is not just a ‘broken jobs engine’ problem, it is a moral crisis that will not be solved by constantly looking at specific down stream effects. At some point you have to start talking about the CAUSATIVE sociopathic disease of Evilism morphing into Xtrevilism and take steps to eradicate them both. Exacerbating this effort is the fact that the disease of Xtrevilism’s main characteristic (symptom) is use of the Noble Lie and they have therefore convinced many — by outright bold faced phony baloney lies — that they are deserving of their societally unhealthy destructive wealth and status, and worse, convinced many to aspire to it.

It is the degradation of morality caused by the increase of bold faced phony baloney lies that is the core problem today.

Yes, because our elites always present us with the facts, and always stick to the unvarnished truth, and because they never use any propaganda or slanting of the truth in an effort to manufacture consent, then out of fairness to them, and in order to return the favor, we must always limit ourselves to “just the facts, m’am”.

I would highly recommend the book: Columbus and Other Cannibals by Jack D. Forbes. It discusses the Native American concept of Wetiko, which is more or less the same as your idea of Extrevilism. This sociopathic disorder has been around forever, it has now just reached it’s most virulent and powerful state.

There is and always has been one effective cure for this disease: Love.

Black Swan thanks. A quick look at Wicki and Wetiko would lead me to believe that there are some similarities in my thinking, especially as I see Evilism, and its rapidly blossoming mutation of Xtrevilism, and the opposition to them both, as being based in the myth, magic, and religions of the past. But that past perspective lacks perception of the now and needs a current adaptation to the present reality in order to explain the rapidity of change and why it is so important to get our moral house in order as soon as possible. There are a number of very concrete reasons for the rapidity of change, mostly centered around the creation of DETODs and the effect that they have of putting the few in the ‘rational’ mind framwork as opposed to the pre-DETOD more emotive mind. It is more than just AI alone, it is ALL technology, all DETODs, and has more to do with the socially beneficial control of them and their creation.

The greatest difficuly, as I mentioned above, is the sociopathic use of the Noble Lie as it creates the culture that we are bound to, forms our negative belief systems and so deceives us. There was a time that if you thought the rest of the country was crazy and effed up you were sane then you were the odd one. That is not so true anymore as the disease progresses.

The effective cure is going to take more than love. Exposing the disease and its effects — excessive wealth for the few and gross misdirection of resources — is the first essential. That will take much hard work and then comes the tough love of institutionalizing the biggest offenders — all of theses pillars of the community are in reality the killers of the community and need to be put away.

Correction; There was a time that if you thought the rest of the country was crazy and effed up you AND YOU THOUGHT THAT YOU were sane then you were the odd one. That is not so true anymore as the disease progresses.

“the Forties and Fifties, when big business passed along the extortionate demands of a few big industrial unions in price increases which devastated the largely unorganized remainder of the working class”

Devastated the working class in the 40’s and 50’s? WTF? The only problem with that statement is that it’s completely contradicted by the facts. The 40’s and 50’s were a time of broadly rising prosperity, including the working class.

“We are likely to experience steadily shrinking employment (and ever intensifying competition among job holders) until government is reorganized as an employer of last resort”

Or policies are adopted which tighten the labor market. The government as employer of last resort is a desperation measure and doesn’t provide decent middle class jobs. Try reducing the trade deficit, actually enforcing some of our existing labor laws, and maybe even a little old-fashioned arm twisting. Gee XYZ Corp., sorry you had to layoff 10k people even though you’re profitable. Now about that bid on a government project, seems we’re having some difficulties. No, no relation to the layoffs; just mentioned that as an aside.

Even Herbert Hoover was willing to do a little arm twisting. Think he could run in place of Romney? I’d probably vote for him as the most progressive candidate.

Broadly rising prosperity?. In the Fifties an average income was about $2500 per year. A corporate vice president made $25,000, a US Steel chairman, $200,000. What you had in the late Forties and Fifties was broad based thread bare respectability with enclaves of prosperity for those who made the early suburban leaps from decrepit big cities on the wings of nothing down GI mortgages, and for war profiteers who paid cash. What made the times comparatively prosperous was the absence of depression and war (unless Korea got you). Of course, you still had McCarthyism, and the threat of nuclear war, but jobs were available because Europe and Japan were in ruins and tariffs protected domestic manufacturing. Small business was possible on a shoe string. Banks actually lent money for productive purposes, so, yes, things were better but there was no capitalist nirvana for Reaganites to gush about.

Perhaps you’ve heard about the technological progress that allows real per capita GDP to increase? Sorry if they didn’t have 2012 technology in 1950, but that new-fangled electricity and central heating was a big improvement on what their grandparents had.

Unions went from worker movements to institutional players as their initial worker and more radical roots got shorn by the anti-communist McCarthyism of the 1950s. As institutions, they continued, for a while, to support wages and benefits not only for their memberships but for related workers more generally. That is an important point to remember. Strong unions raise the floor for wages and benefits in their industry and elsewhere. However, with the loss of the movement quality of their organization, when labor movement became just a name and not a description, unions lost crucially the popular support of the public. By the 1970s when kleptocracy began its rise, it became part of the associated class war to portray unions as grasping, greedy, and only out for themselves. This was both very effective and not that hard because by that time there was a lot of truth to the characterization. And the reason this was so was because unionism as a movement had ceased to exist. Since the 1970s, unions have become shells of what they were even in their institutional heydays. Worse, they have become shills for a deeply corporatist Democratic party.

It is really important to distinguish between unionism as a movement and the sorry sold out thing current unions have become.

I’m sorry but that’s romantic nonsense. Unions stopped being progressive with the murder of Big Bill Haywood (1910). The big industrial unions barely cared about their members, didn’t give a fig for anyone else. Steelworkers, autoworkers were among the most conservative elements in the 1960s, supported Nixon and bashed opponents of the Vietnam War. That’s one of the reasons nobody cared when when their power was broken in the Eighties.

I am not sure why you dislike unionism but you decry a fairly straightforward history as romanticism and then in the next breath cite the death of Big Bill Haywood, and you do that without any apparent sense of irony.

I hate to break it to you but if change is going to come to this country it will be through a mass movement that brings in and speaks to these conservative types you are so dismissive of. And it will happen by fostering a sense of solidarity. You know one of keystone concepts of unionism.

I don’t dislike unionism. But you can’t just ignore history. The industrial unions which grabbed power after 1935 were simply another aspect of the corporate machine. They extorted gains for a small group of workers and otherwise cooperated in the suppression of economic and social progress for everyone else. Unionism hasn’t been a political movement in America since the incarceration of Debs (okay, nine years after Haywood), and technology has moved on to eliminate our manufacturing base, so you might as well put your faith for the future in unicorns.

You can’t expect much in the way of political change from a people who resolutely refuse to understand how things actually are. Americans still believe in the frontier myth of personal independence, getting individually rich. They continue to worship the looters paraded on CNBC, believe that with hard work and just a bit of luck they or their heirs can join them at the top. Maybe after a depression that lasts twenty years this will change. We’ll see.

We’ve had twenty five years of “productivity increases” due to automation, outsourcing, slashing corporate payrolls and inflation induced reduced wages. Most people employed today are doing what it took 20-30 times the number of people to do a quarter century ago. In most cases, that productivity gain has gone towards corporate dividends, cash accrual, management bonuses and unnecessary capital expenditures, and the people who ultimately get this windfall are fighting tooth and nail to KEEP ON getting that. Frankly, the only people who haven’t increased their productivity over this time are bloated CEOs, investment bankers and speculators. They’re just as lazy and clueless now as they were a quarter century ago, only they’re a helluva lot better paid for it.

It hasn’t gone to dividends, just to acquisitions and CEO looting. Shareholders are being shorn too, are supposed to sit tight and hope for capital gains. Meanwhile the market has gone sideways for ten years, except when it has tanked.

There never was such an economic model, and the closest we came was in the Forties and Fifties, when big business passed along the extortionate demands of a few big industrial unions in price increases which devastated the largely unorganized remainder of the working class.

Excuse me? I notice you blame the workers first and not the CEO’s exorbitant pay.

I would say that labor won’t find representation inside government until it moves beyond its fading union structure and organizes as a political party. May as well expose to present-day partisans where it is their allegiances are being spent.

Unemployment would be down to 7%ish–Krugman and other sources have pointed out the contraction in local and federal government workers has been huge and is arguably the biggest difference between this recovery and others (Regan etc.)

If Krugman said it we must oppose it. Perhaps keeping the status qou employment of public sector workers not such a great idea but maybe if they were deployed in rebuilding the transportation and electricity infrastructure you may have something positive by building something that generates long term returns.

I don’t have comparisons to other administrations, but have heard that public sector layoffs have about a direct effect of ~1% on the unemployment number. The indirect effect would push it a bit higher.

One is reminded of the immortal Shrub’s classic comment during the meltdown, delivered in the classic, dry, slightly irritated and combative west Texas style style he perfected toward the end of his reign: “I’m not an economist, I’m an optimist.” Ahh… those were the days…

Sharing productivity gains between labor and management? When? Where? From the 1930s on, as the essays in my book AUTOWORK show, management pushed labor with the threat of firing, replaced labor with machines that worked faster and more accurately than labor, and moved factories to cheap labor states in the South. Work was reorganized to eliminate half second upon half second of breathing space. The auto workers,until the 1980s, received piddling portions of these productivity gains (if they were not made redundant). And all the while management (except for a brief period in the early 1950s)violated the constracts they signed repeatedly, piling up thousands of unmediated grievances. The head of GM labor relations (the uncle of a friend) was dismissed for advocating fair treatment of blue collar workers. Let us abandon the idea of a golden age for labor (except for construction unions, which used their ability to supply labor to get high wages.)

Looks like you haven’t done your homework. Kennedy told anti union CEOs (I believe the poster child was US Steel) that if they didn’t continue sharing the benefits of productivity gains with workers, he’d get it enshrined in legislation. And this was embodied in an understanding called the Treaty of Detroit.

There is a chart that has been widely published, which I am having trouble tracking down (charts, not having words in them, are hard to search for) that shows the divergence between productivity gains and wages, and it started in the mid 1990s. You also see it reflected in declining wage share of GDP and rising profit share, see here:

Another Kennedy myth, as if we needed one. Guy was President 3 years and spent most of his time getting laid. As I recall he made Roger Blough roll back a steel price increase. That was his record on the economy. Now he’s a friend of the workers? He got us bogged down in South Viet Nam defending the regime of a parasite. He brought us to within three inches of nuclear war over Cuba. Has anybody ever thought seriously about why he was killed and who killed him? The Warren Commission report reads like a bad movie script.

And increasingly, when I see the Wall Street Journal interview the owner/operators of small or medium-sized businesses, a surprising number display contempt towards workers (you’ll see it particularly when they complain that they can’t find enough good workers, which in the overwhelming majority of cases means they aren’t willing to pay up for the sort of people they’d like to hire).

And they most certainly are not willing to train workers for these supposed jobs that go begging for qualified applicants. They insist this must be done on the taxpayer’s dime. And then maybe just maybe they might degn to hire someone. Probably not.

That’s not a negative for many people. I enjoy working and surely benefit from having other women in the workplace (at all levels in my organization) and I could care less which of us is the higher earner. My husband enjoys not having to be in the rat race which is not his thing, he wouldn’t consider himself displaced.

Yves: “from the old economic model of sharing productivity gains between labor and businesses”

One thing you should clarify (assuming you agree with me) is that this model was not something that business and capital accepted easily. Rather it was a classic example of “get them by the balls and hearts and minds will follow”. They were largely forced through collective and political action into accepting it. Wise business people realized it was better to get rich and spread around a little of the wealth than to go broke.

“our high unemployment isn’t just due to the aftermath of a global financial crisis”

Most of the decline in public sector jobs over the last four years, something not reflected in your graph, have been at the state and local level. State and local governments, not being monetary sovereigns, have a requirement to balance their budgets. The layoffs at the state and local level are a consequence of declining revenues coupled with contractual requirements for pay and benefit structures for their employees. When revenues decline and as, in particular, benefits become more costly, laying off employees is really their only alternative.

What do you think should be done? That’s not a rhetorical question. I really want to know.

Other than revenue sharing (transfer from feds) with local jurisdictions there is not much to be done. Of course it is interesting that since 1970 student enrollments in U.S. schools has increased by just shy of 10% and employment of teachers and public school staff has increased by 80% and quailty has mostly decreased so who knows maybe some parring in the local government front is not a bad thing. Perhaps subisidizing small business and entrepreneurs more generously rather than public servants is the way to go…

But in looking at state budgets, you must examine both the revenue and the spending. Cutting local and state workers certainly cuts the spending side of the equation, reduces long-term pension obligations, and helps balance budgets. But a solution could lie on the revenue side. States have too long been providing too much tax “welfare” for corporations and their richest citizens.

Look at Kansas. Gov Brownback just pushed through a budget that allows all LLCs and S-Corps to pay no state taxes–I mean ZERO (yay for me! I have a KS LLC). So what do you think this does to the spending side? Spending has to be cut, and state workers laid off. With some intestinal fortitude, revenue could be raised, but most states don’t have the guts to touch the corporate and 1% subsidies.

Well many incorporate in Delaware and or Nevada and many states like say Texas have no income taxes for physical or juridical persons. Its property tax, state income tax, federal transfers and well all those will be (are) like gettiing blood out of turnips. The several policy fixes will not work at all in a contracting i.e. every poorer country. You can do all the policy fixes you want in say Chad but nothing will come of it.

It might have helped to link to the actual post. It shows a St. Louis Fed chart as well that shows the decline in a a St. Louis data series called “US Govt”. Mosler confirms in comments that he is pretty sure this is just Federal workers.

So this is not just a state and local problem. In the Depression, the reason the US didn’t pull strongly out of the downspin despite massive Federal spending were state and local government cuts.

Nixon had revenue sharing. In retrospect, had Obama really wanted to solve the jobs problem (which he didn’t) it probably would have been vastly more saleable to have a mix of Federal programs + revenue sharing. What Congress critter would dare stand in the way of pouring money so directly into his/her constituency?

The other bit is messaging. The collapse in state and local revenues is the direct result of the financial crisis. Yet it’s somehow depicted as the fault of these entities, and worse, pension commitments (when in fact most of the shortfall is in a few places with massive gaps, NJ begin the biggest, due to decisions taken in the 1990s to underfund).

Even Keynes recognized that capital mobility would create unemployment in the capital exporting countries. In a system of global capitalism it is impossible to maintain high levels of employment. Europe bit the bullet harder as it committed to providing (relative to U.S.) higher levels of infrastructure, better education and welfare. The U.S. did a fair bit less but ultimately both offshoring and capital mobility will destroy jobs. Its a common sight, a plant would get sent to say Brazil and sooner or later a large infusion of even pension fund money into the (put Mexica, China, Brazil, South Africa,) stock market and also building plants etc. EVen if the mental models were changed this afternoon, can; put the Jenie back in the bottle.

The ‘jobs engine’ is not broken. Even with offshoring we are creating 100,000 jobs a month. The problem is that we are importing record numbers of foreign workers in order to deliberately keep unemployment high, which keeps wages for the many low and profits for the few high. It’s called supply and demand.

Recently Singapore increased the numbers of foreign workers, and predictably, wages started to fall even as rents and profits increased. This is the obvious result of a simple policy.

No, unemployed foreign nationals don’t magically create jobs out of thin air any more than unemployed US citizens or permanent residents do.

If a bridge is rated to safely handle a load of 100 people, and you march 200 people on it, and it collapses, do you blame the bridge for not automatically becoming stronger? Rubbish. Certainly more people can build stronger bridges, but only in time and with the right tools and resources. Ditto with an economy. Until we stop setting logic on its head and allow ourselves to address the simple and obvious – that high unemployment is the result of deliberate policy – no progress can be made.

Good point. Even the late Barbara Jordan pointed out that large numbers of immigrants (or undocumented workers or whatver the term de juere) would most significantly hurt the employment prospects of the black community. This of course is a verbotten topic with various aspects all on the edge of hate speech or hate facts I guess–immigrants costing jobs, overcrowding schools, crime, depressing wages, etc. I would hasten to add, I am an immigrant and well I keep hearing of people “going back” and last year I read 1 million mexicans went back. So it grim even for us immigrants (I came in 1964) and well I am also “going back in the next few months but will continue to annoy people on NC despite my new country of residence.

Nothing like Republican bumper sticker arguments in an effort to derail comments.

1. American has a higher than replacement level birth rate. We need to generate more jobs on an ongoing basis to deal with population growth

2. The idea that our current failure to generate enought jobs for 1. has to do with illegal immigrants is completely counterfactual. Have you not seen recent reports that illegals are leaving because job prospects here are poor? In addition, have you managed to miss the shocking level of unemployment among new college grads? These by defenition are not illegals, and are traditionally one of the most sought after cohorts by employers, since they are cheap relative to their energy level and presumed intelligence.

You reallly did not read what we posted. Not trolls nor republican bumper sticker slogans. Yes, illegals are going back–read my post. That is the point–jobs are scarce and undocmented and documented workers are returning to naive lands. thats not a republican point its a fact. Barbara Jordan was a democrat and was against immigration. where exactly are the republican slogans here?

As an immigrant and with about 20 immigrant cousins and siblings in the U.S. I am keen to know how we and millions of others do not a.) contribute to lowering wages and b.) how we in some measure do not displace workers. Most empirical research (George Borjas at harvard–also an immigrant) show we have indeed suppressed wages. To your pont many of us are leaving due to both bad job situation and that things are becoming more expensive, stressful and unpleasant–such as people calling you a republican or troll. The lack of civility is one reason to leave…

Anyone who thinks that either major party is actually concerned with creating jobs is not paying attention.

Republicans and Democrats alike are disciplining the work force. Now that there are no restraints on the greed of corporations and the rich, working people can finally be put in their place. Their role is to subsidize the 1%. Every “crisis” the 1% inflicts on the rest of us is used to move what resources remain below to the very top.

I use the term “DISemployment,” rather than unemployment. Clearly, we’re looking at a new normal where many millions of American workers are simply thrown aside and left to suffer, while a statistically predictable number of them will die. And this new normal is a policy for which there’s complete bipartisan consensus.

Unemployment/underemployment in advanced political economies is more structural than it is cyclical and as both the recent survey of “economists” in this country as well as a recent OECD report suggest it will likely stay above 5% [ so-called FULL EMPLOYMENT by economists in this country] and much higher elsewhere well into the future.

Exacerbating this is the mismatch between skilled labor and unskilled labor required to “run” this economy. There simply is little demand for the latter like there was when manufacturing dominated the economy. And why pay for skilled labor when the supply seemingly exceeds the demand? Globalization has only exacerbated this and dampened the bargaining power of those with such skills. Presumably infrastructure reconstruction and newer forms of energy will provide the demand for employment to mitigate this structural problem. But not without massive government intervention, right? The likelihood of which IS? NOT!

We are in the throes of a structural transformation – INDUSTRIAL ENCLOSURE – similar to what occurred in agriculture.over the course of the past few centuries. The future demand for unskilled factory labor will continue to gravitate to those regions/localities “willing” to work for less like it always has and exert downward pressure on wages overall. But the absolute number of persons employed in such jobs will continue to decrease as automation/rationalization intensify. This, in turn, will facilitate the polarization between “skilled” and “unskilled” labor even more, making it extremely difficult to organize either. Those employed will increasingly come to despise the unemployed as the culture of fear and timidity among them dampens any attempts to resist exploitation because they could be next. Likewise, the unemployed will come to despise the employed much like unorganized workers resented their better paid organized brethren in a replay of divide and conquer.

Is it a coincidence that we are now witnessing the elevation of the “job creator” to the status of American Idol? The idolatry of the “job creator” and worship of the hero-entrepreneur is just too obvious. Mitt Romney epitomizes this mentality. That’s how capitalism works, remember? The provision of employment now bestows God-like powers upon those who do the hiring. Or at least that’s what the creators want you to believe. We must now worship at the altar of the “job creator” in a Randian celebration of the hero-entrepreneur – the INDIVIDUAL CREATOR! But they aren’t hiring. WHY?

When has anyone hired someone if the need/demand for that labor didn’t exist? And we sure as hell know what happens when the demand isn’t there – like now. The retention of labor during slack times can only last so long before the decision is made to RIF/lay someone off. Overall aggregate demand is what really drives the demand for employment. – not this myth of the “job creator”. Beware of this new idolatry!

But that still leaves US with the unemployed/underemployed. Perhaps it’s time to consider employment in light of the technological advances of the last century and realize that LABOR is increasingly superfluous. Productivity has increased to the point that the amount of labor required to procure the basic material necessities has decreased. The “toys” that we think we need drives the rest. But why work anymore than is necessary? I would gladly forego a raise in return for a reduction in the required number of hours per week. And I don’t think I’m alone. Trouble is those scraping by will gladly work the hours you or I don’t want to and the “job creators” never fail to remind us of how much “more hard work” is good for the soul… It’s almost as if work is a religious, supernatural experience. Just remember God only worked six days in the story of creation. Hasn’t worked a day since! [Paul LaFargue]

If reduced unemployment is the goal then reducing the work week is the first step. Moreover, I suspect “sharing the work” is more preferable to “sharing the wealth”. Just ask the “job creators” what they would prefer if push came to shove? But I suspect there will be a good deal of resistance from many of those still employed with the mentality that “I’ve got mine, you get your’s”. Looking out for #1 comes first, right? Convincing those with either mentality that a reduced work week is in their best interest and our collective interest may be the hardest task.

“Unemployment/underemployment in advanced political economies is more structural than it is cyclical”

Which explains why we had such high unemployment but a few years ago – except that we didn’t.

BTW, the key characteristic of structural unemployment is high demand in some fields and low demand in others. That is not the current situation. The structural unemployment explanation is just a lame excuse to do nothing about unemployment.

The answer is no. There has been some very good work on this topic done by the folks at Economic Policy Institute. They’ve done granular analysis by job type and show that unemployment is high across job/industry sectors. This is absolutely not structural unemployment, that’s a meme to get economists and the Administration off the hook.

And software? Go look at Slashdot. Yeah there is a bubble in Silicon Valley right now, lots of dough for hot startup ideas, but the general trend in IT is to more and more offshoring. And this includes more senior jobs.

Isn’t offshoring/outsourcing a form of structural change that has happened over the past 30 or so years that has gone into overdrive in the about the past 10-15 or so, which has lead to a (structural?) unemployment situation with too many qualified people chasing too few opportunities with a fundamental change in how businesses seek out employees, e.g., racing to as low a bottom as possible in the lowest labor cost markets?

That’s not quite right… Plenty of people can be IT monkeys – debugging desktop problems, installing network cables, etc. Most of this can be taught and if you follow the guide and have a little bit of problem solving skills you can do the job. The market for IT people is decent but I suspect there is plenty of underemployment there.

Software is unique in that a good developer is generally at least 10x more productive than a bad one. It appears that only a certain percentage of the human population have the brain to be good developers and no amount of early childhood encouragement, education, experience, or reward can push someone across that line. Good developers, like good athletes, are born. And like good athletes they must train and work hard to develop those skills, but if you aren’t born with the “sprinting” genes you will *never* compete in the Olympics.

I say all that to say that world-wide demand for good developers is high and shows no signs of slowing down… My company used to get 3 Indian coders for 1 US developer’s salary (just needed more people – we were also adding devs in the US at the same time). Now that’s down to 1.2:1 due to increased global demand.

As an aside, here in the Dallas area we never had the housing bubble so we haven’t been hit nearly as hard. Things are generally OK and the employment situation (including new housing construction) is doing well relative to the rest of the country.

It’s quite amusing to hear friends/family talk about government regulations, taxes, Obamacare etc. I have to gently remind them that I am the only one actually affected by any of that (and the only one among my friends living the middle-class dream; depressing) and I am happy to pay slightly higher taxes so they can get some assistance. It is quite obvious they are just repeating talking points they’ve heard and have no actual clue about taxes, deficits, the size of government, the real cause of the crisis, etc. It’s pure ideology; they parrot phrases they’ve heard like children with no understanding.

Very insightful commentary. We don’t need “jobs,” we need to share in the monetary wealth created by increased productivity. Failing that, we’ll have what we’re about to have: an epic social breakdown and very likely somebody’s (remains to be seen whose) blood in the streets.

“even if miraculously the manufacturing ever all returned, there’s zero guanrantee it’d bring /any/ meaningful increases in “jobs”. There is a good chance that the “luddite fallacy” is in fact reality, automation of mental tasks via ever increasing AI capabilities will enable ever smaller amounts of people to run the entire productive economy.”

“Return of manufacturing” at this point means a production sourcing decision by large corporations that previously offshored & outsourced their production. They were careful to retain control of their distribution channels.

The creation of new manufacturing jobs will entail the development of new distribution channels.

In a kleptocracy, workers are looted. The companies they work for become asset extraction devices for the kleptocrats who strip these firms, dump their pensions, dump or neuter their unions, and then, in more the last few decades ship many of the remaining jobs abroad.

The kleptocrats are aided by free trade agreements pushed by both parties, the anti-unionism again of both parties, and, as you note, the war on workers’ wages the Fed has been waging in the name of controlling inflation since the 1970s.

On a different topic, as I have pointed out a few times since the June jobs report came out, that 80,000 jobs number is a fiction. It corresponds to nothing in reality. It is a point on a line drawn through the monthly and seasonal variations in job growth and loss during the course of the year.

This is what I wrote elsewhere:

“Finally, a word about seasonally unadjusted jobs numbers. Most jobs are created in the first half of the year January-June with a peak in June and a second usually higher peak in November. In 2011, for example, 4.013 million jobs were created January-June while 625,000 jobs were created June-December. In 2012, 3.819 million jobs were created January-June, 194,000 jobs less than last year. From the viewpoint of the seasonal adjusted numbers, most of the jobs that were going to be created this year, already have been and of those that likely will be created during the rest of the year, not quite half will be created for the Christmas shopping season.”

What is important to understand is that regardless of what job numbers are reported for the rest of the year according to the “sacrosanct” seasonally adjusted figure, in the real world most (as in the vast majority) of the net job creation for the year has already occurred.

Do you really want the Gates Foundation planning parenthood globally? Do you really want Monsanto planning Agriculture globally? Do you really want NS* planning technology globally? Do you want to live in a sterile world?

“Is it not lawful for me to do what I will with mine own?” Is it really a choice between central social and economic control and patriarchal religious and political control, intellect or emotion? Do you really want to spend 40 years in the desert arguing over gold?

“By little and little I will drive them out before thee, until though be increased, and inherit the land.” “Prepare thy work without, and make it fit for thyself in the field; and afterward build the house.” The divine providence, central control Pavlov swap has been going on since the beginning of recorded History. Manifest destiny has always been the mantra of the tyrant, on both sides, converting spiritual control of the many into material wealth for the few. Where do you find privacy in such a world?

There is nothing new about granting monopolies and thereby creating artificial scarcity to the end of central government control, with nothing more than a vague promise of equal entitlement to the so-willing majority. “The eastern Sheppard leads his flock, and encourages and controls them by addressing the leaders by name, the rest of the animals dociley following these ‘principal of the flock.’” The only difference in the latest ponzi is the nature of the science forcing productivity and variety at the expense of quality and vitality.

Joseph stripped the Egyptians into serfdom and granted them seed in return for 1/5th share to the pharaoh, which granted the priests their 10% tithe, with a bureaucratic system of licenses and permits, inspectors and fines, ensuring that periodic famine would drive the people into the cities, leaving refuge migration through the intermediary killing fields for proper conditioning, new methods, and their derivative wealth, stripped of family origination. Babylonia, remember, was an ‘intellectual’ center of leadership.

The majority always prefers easy rewards. Politics is all about assigning scapegoat status to economic idea-holders, separating the wheat from the shaft, within ‘home rule,’ to ensure empire growth at least cost. The Garden of Eden, among trees for atmosphere, water for transport, and soil for nutrients, is the stage upon which the knives are inserted. Time and time again, the totalitarian employs democracy to liquidate the democrat, and “down the slope of diminishing returns the nation slides.”

An honest man and a discreet woman are of God, neither of which the empire can tolerate for long. All others say one thing and do another, to some degree of separation, as the expected example to empire offspring. Keep your distance relative to their ambition. “Render to Caesar the things that are Caesar’s, and to God the things that are God’s.”

“Moab hath been at ease from his youth, and he hath settled on his lees, and hath not been emptied from vessel to vessel, neither hath he gone into captivity; therefore his taste remained in him, and his scent is not changed.” “The tree of the field is man’s life,” and “all flesh is grass.” “Shall I leave my wine, which cheereth God and man, and go to be promoted over the trees?” “No man putteth new wine into old bottles; else the new wine doth burst the bottles.”

“Weeds are plants whose virtues have not been discerned,” and life is all about discernment, which the majority naturally takes for granted. Beware the false jubilee, to stagnate the land and enslave the level population to it, in the name of preserving the status quo. Tithing “shall be for the stranger, for the fatherless, and for the widow.”

An economy cannot prosper without trust, faith in the ability to adapt, to the unknown, whether one chooses to call it God or not. CO2 is a symptom, of the inability of institutions to adapt. A slogan about manifest destiny is great for homogeneous, good vs. evil, simple event horizons, amidst an unsympathetic empire majority, but it is grossly inadequate for the natural world. Adjust accordingly.

A corporation is a piece of paper, a myth, a fiction, of false assumptions, and nothing more. It exists only to the extent that you choose to breathe life into it, as a point of reference, in your quantum development. Ratchet up the law with leverage, and cut the line, once your children are properly seated. So, the masters and their co-dependent majority assume they know better…

David beat Goliath, with skills learned leading his flock through the killing field. Jesus is the one and only way, to life. The city on either side leads only to death, at various rates of speed. Whether a Sheppard is a terrorist or not depends upon your frame of reference. Don’t knock on the door with ill-intent and expect a happy outcome. If you are of goodwill, however, and experience anxiety, step forward, not backward. God, and physics, ensures the outcome. History is littered with corpses, of good and evil.

What did Nixon say? If the President does it, it’s legal. Welcome to the United States of California; get them before they get you. Flip it, and drop the bridge, when all the robots have arrived.

Dr*t. I wrote a long comment about how the real unemployment rate is 12.6 percent and the real disemployment rate is 17.6 percent and how these are defined down to an official unemployment rate of 8.2 percent, and how with a 7 percent structural unemployment rate the problem is defined down to 1.2 percent or just over 2 million down from 28 million disemployed.

I don’t know what it is but I always have trouble with WordPress posting comments on labor. Anyway the short story is don’t believe the numbers. They reflect a sanitized, trivialized view of the problem which our political elites wish to convey.

One thing I don’t see mentioned much is the amount of free overtime that salaried workers are putting in. If overtime laws applied to skilled/salary workers as well as less skilled/hourly workers I bet we’d see some job creation.

There might be side effects, since the employers would have to pay for more benefits. For example more outsourcing of services might result.

There are many jobs, especially those that involve human-human interaction, that can not be done by machines and/or cannot be made more efficient beyond a certain point: teaching, medical care, nursing care, elder care. There are others like tech support that people would prefer to deal with a human and one from this country. I have seldom heard anyone say anything good about their interaction with an Indian call center. On the other hand, I have seen people breathe a sigh of relief when they get an American on the other end of the line. There are also jobs in industries like banking where people would like to deal with a person and not a machine. There is finally the fact that efficiency is vastly overrated. Some is good. There has to be enough for things to function and get done, but at a certain point efficiency degrades the quality of our lives. An efficient eating experience is very different from a good eating experience, for example.

I did say “non-creative” work. But what will the checkout people do when one can simply push his shopping cart out the door of the supermarket without waiting in line? When even the need to manually scan is automated away?

IF we had had ethical money creation these concerns would mostly be mute since workers themselves would benefit from automation or at least have a lot more power to resist it by, say, voting against it at stockholder meetings.

It all goes back to the banks, those usurers for stolen purchasing power. Where did Dante assign them?

Usurers (Canto VII) occupy the third and innermost round of the Seventh Circle of the Violent. Their sin is against Nature and art (works that come from nature). They sit on hot sand with burning rain falling down. They are tormented from above and below. They wear purses around their necks which they can’t take their eyes off of. Usury itself is explained at the end of Canto XI:

“Philosophy,” he said, “to him who heeds it,
Noteth, not only in one place alone,
After what manner Nature takes her course

From Intellect Divine, and from its art;
And if thy Physics carefully thou notest,
After not many pages shalt thou find,

That this your art as far as possible
Follows, as the disciple doth the master;
So that your art is, as it were, God’s grandchild.

From these two, if thou bringest to thy mind
Genesis at the beginning, it behoves
Mankind to gain their life and to advance;

And since the usurer takes another way,
Nature herself and in her follower
Disdains he, for elsewhere he puts his hope.

i would like to agree with the posters who side with your analysis but also point out the growing role of automation and robotics.

I was in Milwaukee a few weeks ago and took the free propaganda tour of the Miller Beer factory. My work associate and I were both struck by the dearth of live bodies employed in the huge factory. We toured several large buildings, many larger than several football fields, and I only saw three humans beings engaged in the brewing and bottling of beer. The rest was automated or completely handled by machine. On the other hand, the young, college age (non-union, low-payed, summer temp work) tour guides were abundant. We probably saw thirty or forty. They at least out numbered the factory numbers two to one. Not very scientific, I know, but I can’t help to feel the Miller factory situation is instructive when thinking about the jobs data.

The article and most of the comments reflect a lot of book knowledge and economic theory, very little of practicality. Think about this just for a minute. If you owned a small business, how much money would you have to make before you decided to put some of your capital to work by hiring another person to expand the business?

Of course, different people would answer with different amounts, but for me I would like to make at least $250,000/yr in income before risking hiring someone in this market. Corporatists, crony capitalists, and the Obama government are all out there lurking to swoop in on my profits any way they can think of. The general regulatory climate is worse and worse.

Why would I hire?

The short answer is…..I wouldn’t. And that’s why you see all that money sitting on the sidelines. That’s why the real unemployment rate is somewhere north of 17%.

You don’t need to have a degree to figure this one out. It’s amazing to me how so many eggs are scratching their heads at why the “recovery” has no legs.

The current unemployment rate at least in part reflects a tacit acceptance of a new order, one that is not to our collective advantage, and that deserves to be challenged.

Agreed. But as simple as it sounds, the new order seems to consist in the fact that everyone in America hates almost everyone else in America. You can’t fix an unemployment problem when most of the employed loathe the unemployed.

The evidence is everywhere; Social Darwinism is everywhere. It’s hard to find a discussion of unemployment where one of the discussants is not suggesting in some way that the problem with the unemployed is that they are either stupid, lazy, uneducated, overeducated, morally weak or in some other way only receiving from the invisible hand what their social and productive inferiority has defined as their just desserts.

There is a whole genre of reality television that teaches Americans their problem is that the are fat, lazy, stupid, and too nice to other people; and until they become lean, mean and self-interested competition machines they will never amount to anything.

Yes–many firms will not hire people who are currently unemployed or who have a “gap” in their emplolyment record. Was doing some work for a federal agency a few years ago as a contractor and the contracting officer called me in as she saw a gap in my employment from 1992-93. This was in 2009. Various forms of discrimination do indeed exist for those who are or have been unemployed–even the ol so what happened? Why were you laid off–the implication being that your skills are not that valuable or that you are in some other way undesireable. Being unemployed is a horrible expereince and in the U.S. its very hard to bounce back from it.